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Pfizer Inc (PFZ)

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Monday 22 January, 2007

Pfizer Inc

Pfizer's Plan for future success


 Pfizer Announces Priorities to Drive Improved Performance, Position Company 
            for Future Success and Enhance Total Shareholder Return

                          Company's Plan Focuses On:

             Maximizing Revenues from Current Product Portfolio

     Investing in Medium- and Long-Term Growth Opportunities through Internal 
                      Pipeline and Externally Sourced Products

                  Establishing Lower, More Flexible Cost Base

         Creating Smaller, More Focused and Accountable Operating Units

    NEW YORK, Jan. 22 -- Pfizer Chairman and Chief Executive Officer Jeffrey B. 
Kindler today announced the company's immediate priorities to drive improved 
performance, position Pfizer for future success and enhance total shareholder 
return.  Executing on those priorities will mark the beginning of an ongoing 
process to change the way Pfizer does business.
    "Pfizer is a great company with a great future," Kindler said.  "We are 
facing significant challenges, however, in a profoundly changing business 
environment.  I believe we must fundamentally change the way we run our 
company to meet these challenges and to take advantage of the diverse and 
attractive opportunities that we see in the marketplace.
    "We need to maximize near- and long-term revenues from our current product 
portfolio, from our pipeline and from external opportunities," he added.  "We 
must reduce our absolute costs and put in place a more flexible cost structure.  
We are establishing smaller operating units that can enhance innovation and 
accountability while still drawing on the advantages that our scale and 
resources provide.  We also are taking steps to enhance our collaborations 
with patients, customers, scientists and business partners, as well as to make 
Pfizer an even better place to work for our people.  We believe executing 
against these key priorities will help Pfizer continue as a market and 
industry leader in the 21st century, and in the process, deliver superior 
shareholder returns over the short, medium and long term."

    PFIZER'S IMMEDIATE PRIORITIES
    In a meeting with financial analysts today, Kindler and several other 
members of Pfizer's leadership team -- including David Shedlarz, Vice 
Chairman; Ian Read, the head of Worldwide Pharmaceutical Operations; and Dr. 
John LaMattina, the head of Pfizer Global Research and Development -- 
discussed the challenges and opportunities facing the company and summarized 
Pfizer's most immediate priorities.  

    Priority One: Maximize revenues in both the short and the long term.

    *  Pfizer plans to maximize revenues from its current in-line portfolio 
       and new products.  In 2007, the company will further highlight 
       Lipitor's unique package of benefits, build on an outstanding 2006 for 
       Celebrex, continue Lyrica's momentum, and introduce campaigns in 
       support of newer medicines.  In pursuing these efforts, Pfizer plans to 
       work differently with its customers - listening better, testing new 
       approaches, scaling up what's working and, in the process, making the 
       company's medicines even more valuable.

    *  To expand future revenues, Pfizer is taking a number of actions to 
       deliver more products of greater value more quickly.  The company will 
       step up its Research and Development investment in areas that are 
       especially promising.  In biotherapeutics, Pfizer will strengthen its 
       capabilities in vaccines and antibodies.  It is also dramatically 
       simplifying the organizational structure of R&D to increase 
       accountability, flexibility, innovation and entrepreneurship.  In 
       addition, the company will complement its accelerated internal efforts 
       with business development activities that will secure new medicines as 
       well as related products and services designed to enhance the value of 
       its medicines. 

    David Shedlarz said, "We recognize that business development is critical 
to our ability to drive revenue growth in the medium to long term, along with 
growing our core products, successfully launching new products, and developing 
and accelerating our internal R&D pipeline.  We are making the changes needed 
to our strategy, approach and capital allocation to best ensure our success in 
this area."  Pfizer plans to launch two new externally sourced products each 
year beginning in 2010.

    Priority Two: Establish a smaller and more flexible cost base.  

    *  Pfizer will generate cost savings through site rationalization in 
       research and manufacturing, streamlined organizational structures, 
       staff function reductions, increased outsourcing and procurement 
       savings.  The company will reallocate many of these cost savings to 
       more value-added activities.  After making those investments, Pfizer 
       plans to achieve an absolute net reduction in the pre-tax total expense 
       component of adjusted income(1) of between $1.5 billion and $2 billion 
       by the end of 2008, while continuing to invest in R&D, business 
       development, emerging markets and new marketing approaches.  

    *  The company's cost reduction initiatives will result in the elimination 
       of about 10,000 positions or about 10 percent of Pfizer's total 
       worldwide workforce by the end of next year.  This includes the U.S. 
       sales organization reductions announced previously.  In Europe, Pfizer 
       will take steps to streamline its operations, with a proposed reduction 
       to its European field force by more than 20 percent -- subject to 
       consultation with works councils and local labor law -- while 
       maintaining a competitive share of voice for its medicines and a strong 
       organization going forward.

    *  Pfizer will continue to consolidate its worldwide manufacturing 
       operations with the closure of two additional manufacturing sites -- 
       Brooklyn, NY and Omaha, NE.  In addition, the company will pursue the 
       sale of a third site in Feucht, Germany, subject to consultation with 
       works councils and local labor law.  From 2003 to 2008, Pfizer will 
       have reduced its network of manufacturing plants around the world from 
       93 to 48, including sites announced today.  Pfizer manufacturing has 
       achieved and will continue to achieve substantial cost savings while 
       maintaining its high-quality manufacturing standards.

    *  In Research and Development, the company is planning to close three 
       research sites in the United States -- Ann Arbor, MI, Esperion (also in 
       Ann Arbor) and Kalamazoo, MI (where the company will continue to 
       maintain a large manufacturing and Animal Health presence) -- and is 
       proposing to close research sites in Nagoya, Japan and Amboise, France, 
       subject to consultation with works councils and local labor law. 

    "These and other actions will allow us to reduce costs in support services 
and 'bricks and mortar' and to redeploy hundreds of millions of dollars into 
the discovery and development work of our scientists," said Dr. LaMattina.
    Pfizer said it will do everything it can to offer support and benefits to 
all colleagues affected by these difficult actions, and said it was committed 
to working with community leaders to mitigate the impact of these closures in 
whatever way it can.
    "These are, of course, complex issues where we must balance many different 
considerations, and they are, without doubt, among the most difficult 
decisions we have to make," said Kindler.  "We have thought long and hard 
about these steps, because we are acutely aware of their impact on colleagues 
and the communities where we are located."  

    Priority Three: Create smaller, more focused and entrepreneurial business 
units that will enhance innovation and draw on the advantages of our scale and 
resources.  

    *  Pfizer is restructuring U.S. Pharmaceutical Operations into four 
       distinct business units, each led by a general manager with profit-and-
       loss accountability, and a fifth business unit responsible for customer 
       support and specifically focused on managed care and access.  No change 
       in the field force organization will be required as these units mirror 
       the existing structure.  Each unit will have the dedicated resources 
       needed to drive the business, including medical, marketing and sales.  

    *  Pfizer said it will simplify its R&D organization and improve 
       productivity by consolidating each of the research teams focused on any 
       given therapeutic area (TA) -- currently distributed in multiple 
       locations around the globe, in many cases -- to one of four major sites.  
       Each TA will be run by a single leader with more responsibility, 
       authority and accountability, as well as more control over resource 
       decisions.  Pfizer plans to exit discovery research in gastroenterology 
       and dermatology, but will continue to develop compounds already in the 
       pipeline and to seek external opportunities in these areas.

    "Our simplified structure will help drive the growth of our expanding 
pipeline -- including our goal to deliver four new internally generated 
products per year by 2011 -- while maintaining current R&D investment levels," 
said Dr. LaMattina.  "This will give us the 'best of both worlds' -- the 
entrepreneurial spirit of a small company, aligned with the world-class 
technologies, platforms and capabilities that only a company of Pfizer's size 
can provide."

    Priority Four: Actively and more meaningfully engage with customers, 
patients, physicians and other collaborators to provide them with greater 
value.

    *  Pfizer said it will experiment with new approaches to bringing its 
       products to market, seeking new and more effective ways of 
       communicating with physicians and patients, inviting payers earlier 
       into the development process, and enhancing its collaboration with 
       academic and other research institutions.  

    *  Pfizer is also committed to playing a more significant role in the 
       national dialogue on improving the delivery of care and patient access. 
       "We must be a constructive voice with our stakeholders on healthcare 
       policy and regulation of our products," said Kindler. "We must be seen 
       as a responsible and active company that is focused on solutions that 
       work for everyone - not just for Pfizer."

    Priority Five: Make Pfizer a great place to work.

    *  Pfizer said that, as part of an ongoing effort to cut down on 
       bureaucracy and reduce management layers, it has eliminated many 
       unnecessary committees and cross-functional teams and is in the process 
       of cutting at least three to four layers of management in its 
       pharmaceutical, R&D and manufacturing divisions, as well as 
       company-wide support functions.

    "By reducing middle management and increasing spans of control, we're 
getting leaders closer to colleagues and customers and giving colleagues a 
clearer line of sight to those aspects of the business for which they are 
accountable.  As a result, our managers will delegate, empower and focus on 
developing colleagues more than ever, and our colleagues will grow and take on 
more responsibility than ever," said Kindler.
    Kindler concluded, "I am convinced that products and services that 
contribute meaningfully to the public's health -- and that address areas of 
major unmet medical need -- will always be highly valued.  But I believe 
Pfizer must transform the way we've done business in the past in order to be 
successful in the future."
    "Obviously, this change won't happen overnight. It will take time, it will 
take discipline, and it will take determination to turn these aspirations into 
reality," Kindler said.  "But at Pfizer today, our goals are clear.  Our 
leadership understands both our challenges and our opportunities.  And we are 
committed to providing the value our customers need, the working environment 
our employees want and the results our owners deserve."

    Financial Guidance for 2007 and 2008
    Pfizer provided the following financial guidance, at current foreign 
exchange rates.

    For 2007:

    *  Revenues Comparable to 2006 
    *  SI&A Pre-tax Component of Adjusted Income(1) Decreases by about $500 
       Million 
    *  R&D Pre-tax Component of Adjusted Income(1) Essentially Flat from 2006 
       Expenditures 
    *  Effective Tax Rate of 22.5% on Adjusted Income(1) before Taxes
    *  Reported Diluted EPS of $1.45 to $1.55
    *  Adjusted Diluted EPS(1) of $2.18 to $2.25, Representing Growth of 6% 
       to 9%
    *  Up to $10 Billion in Common Stock Purchases
    *  Cash Flow from Operations of $12.5 Billion to $13.5 Billion

    For 2008:

    *  Revenues Comparable to 2006
    *  Total Cost as a Pre-tax Component of Adjusted Income(1) About $1.5
       Billion to $2.0 Billion Lower than 2006 
    *  Reported Diluted EPS of $1.75 to $1.93
    *  Adjusted Diluted EPS(1) of $2.31 to $2.45, Representing Growth of 6% 
       to 9%

    Long Term Outlook -- 2009-10

    *  Resumption of Revenue Growth Given Contribution of New and In-Line 
       Products and Dissipation of Loss of Exclusivity Impact 
    
    For additional details, please see the attached supplemental financial 
information and Disclosure Notice.

    (1) "Adjusted income" and "adjusted diluted earnings per share (EPS)" are 
defined as reported net income and reported diluted EPS excluding purchase-
accounting adjustments, acquisition-related costs, discontinued operations, 
cumulative effect of a change in accounting principles, and certain 
significant items.  As described under Adjusted Income in the Management's 
Discussion and Analysis of Financial Condition and Results of Operations 
section of Pfizer's Form 10-Q for the quarterly period ended October 1, 2006, 
management uses adjusted income, among other factors, to set performance goals 
and to measure the performance of the overall company.  We believe that 
investors' understanding of our performance is enhanced by disclosing this 
measure.  Reconciliations of forecasted full-year 2007 and 2008 adjusted 
income and adjusted diluted EPS to forecasted reported net income and reported 
diluted EPS are provided in the materials accompanying this report.  The 
adjusted income and adjusted diluted EPS measures are not, and should not be 
viewed as, substitutes for U.S. GAAP net income and diluted EPS.

    For more information on Pfizer Inc, or to request broadcast-standard video 
related to this announcement, please visit www.pfizer.com.

    
                        PFIZER INC
                SUPPLEMENTAL FINANCIAL INFORMATION

1) Reconciliation of Forecasted 2007 and 2008 Adjusted Income(1) and Adjusted 
Diluted EPS(1) to Forecasted 2007 and 2008 Reported Net Income and Reported 
Diluted EPS


                                                   Full-Year 2007 Forecast 
                                                                 
      ($ billions, except per-share amounts)    Net Income(a)   Diluted EPS(a)
                                                           
       Income/(Expense)                                                  

       Forecasted Adjusted Income/
        Diluted EPS(1)                         ~$15.1 - $15.6   ~$2.18 - $2.25

       Purchase Accounting Impacts, Net of Tax     (2.4)           (0.35)

       Adapting to Scale Costs, Net of Tax       (2.4 - 2.7)     (0.35 - 0.38)

       Forecasted Reported Net Income/
        Diluted EPS                            ~$10.0 - $10.8   ~$1.45 - $1.55
                                                              
                                                                         
                                                   Full-Year 2008 Forecast       
                                                                 
    ($ billions, except per-share amounts)      Net Income(a)   Diluted EPS(a)

       Income/(Expense)                                                  

       Forecasted Adjusted Income/
        Diluted EPS(1)                         ~$15.6 - $16.6   ~$2.31 - $2.45 

       Purchase Accounting Impacts, Net of Tax     (2.0)           (0.30)

       Adapting to Scale Costs, Net of Tax       (1.5 - 1.8)     (0.22 - 0.26)

       Forecasted Reported Net Income/
        Diluted EPS                            ~$11.8 - $13.1   ~$1.75 - $1.93
                                                       
    (a) Forecasts in the table exclude the effects of business-development
        transactions not completed as of December 31, 2006.


    (1) "Adjusted income" and "adjusted diluted earnings per share (EPS)" are 
defined as reported net income and reported diluted EPS excluding purchase-
accounting adjustments, acquisition-related costs, discontinued operations, 
cumulative effect of a change in accounting principles and certain significant 
items.  As described under Adjusted Income in the Management's Discussion and 
Analysis of Financial Condition and Results of Operations section of Pfizer's 
Form 10-Q for the quarterly period ended October 1, 2006, management uses 
adjusted income, among other factors, to set performance goals and to measure 
the performance of the overall company.  We believe that investors' 
understanding of our performance is enhanced by disclosing this measure.  
Reconciliations of forecasted full-year 2007 and 2008 adjusted income and 
adjusted diluted EPS to forecasted reported net income and reported diluted 
EPS are provided in the materials accompanying this report.  The adjusted 
income and adjusted diluted EPS measures are not, and should not be viewed as, 
substitutes for U.S. GAAP net income and diluted EPS.

    DISCLOSURE NOTICE: The information contained in this document and the 
attachments is as of January 22, 2007. The Company assumes no obligation to 
update any forward-looking statements contained in this document or the 
attachments as a result of new information or future events or developments.
    This document and the attachments contain forward-looking information 
about the Company's financial results and estimates, business plans and 
prospects, in-line products, and product candidates that involve substantial 
risks and uncertainties. You can identify these statements by the fact that 
they use words such as "will," "anticipate," "estimate," "expect," "project," 
"intend," "plan," "believe," "target," "forecast", and other words and terms 
of similar meaning in connection with any discussion of future operating or 
financial performance or business plans and prospects.  Among the factors that 
could cause actual results to differ materially are the following: the success 
of research and development activities; decisions by regulatory authorities 
regarding whether and when to approve our drug applications as well as their 
decisions regarding labeling and other matters that could affect the 
availability or commercial potential of our products; the speed with which 
regulatory authorizations, pricing approvals, and product launches may be 
achieved; the success of external business development activities; competitive 
developments, including with respect to competitor drugs and drug candidates 
that treat diseases and conditions similar to those treated by our in-line 
drugs and drug candidates; the ability to successfully market both new and 
existing products domestically and internationally; difficulties or delays in 
manufacturing; trade buying patterns; the ability to meet generic and branded 
competition after the loss of patent protection for our products and 
competitor products; the impact of existing and future regulatory provisions 
on product exclusivity; trends toward managed care and health care cost 
containment; possible U.S. legislation or regulatory action affecting, among 
other things, pharmaceutical pricing and reimbursement, including under 
Medicaid and Medicare, the importation of prescription drugs that are marketed 
outside the U.S. and sold at prices that are regulated by governments of 
various foreign countries, and the involuntary approval of prescription 
medicines for over-the-counter use; the impact of the Medicare Prescription 
Drug, Improvement and Modernization Act of 2003; legislation or regulations in 
markets outside the U.S. affecting product pricing, reimbursement, or access; 
contingencies related to actual or alleged environmental contamination; claims 
and concerns that may arise regarding the safety or efficacy of in-line 
products and product candidates; legal defense costs, insurance expenses, 
settlement costs, and the risk of an adverse decision or settlement related to 
product liability, patent protection, governmental investigations, ongoing 
efforts to explore various means for resolving asbestos litigation, and other 
legal proceedings; the Company's ability to protect its patents and other 
intellectual property both domestically and internationally; interest rate and 
foreign currency exchange rate fluctuations; governmental laws and regulations 
affecting domestic and foreign operations, including tax obligations; changes 
in generally accepted accounting principles; any changes in business, 
political, and economic conditions due to the threat of future terrorist 
activity in the U.S. and other parts of the world, and related U.S. military 
action overseas; growth in costs and expenses; changes in our product, segment, 
and geographic mix; and the impact of acquisitions, divestitures, 
restructurings, product withdrawals, and other unusual items, including our 
ability to realize the projected benefits of our Adapting to Scale multi-year 
productivity initiative, including the projected benefits of the broadening of 
this initiative over the next few years. A further list and description of 
these risks, uncertainties, and other matters can be found in the Company's 
Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and in 
its reports on Forms 10-Q and 8-K.
    This document may include discussion of certain clinical studies relating 
to various in-line products and/or product candidates.  These studies 
typically are part of a larger body of clinical data relating to such products 
or product candidates, and the discussion herein should be considered in the 
context of the larger body of data.

SOURCE  Pfizer Inc
    -0-                             01/22/2007
    /CONTACT:  Media - Andy McCormick, +1-212-733-5469, or Paul Fitzhenry,  
+1-212-733-4637, or Investors - Ron Aldridge, +1-212-573-3685, or Carol 
Schimmelpfenneg, +1-212-573-2718/
    /Photo:  A free corporate logo to accompany this story is available 
immediately via Wieck Photo Database to any media with telephoto receiver 
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    /Web site:  http://www.pfizer.com/
    (PFE)